In the age of AI, judgment may be Australia’s scarcest resource

Artificial intelligence is everywhere. It designs marketing plans, writes code, prepares legal briefs and advises small business owners on pricing strategy.

The debate is often framed in terms of productivity, and rightly so. However, focusing only on production risks missing another postponement. AI also changes what is scarce.

Economists have long focused their thinking on signals. Degrees signal skill. Output signals effort. Expert advice signals good judgment.

These proxies were never perfect, but they were generally reliable enough to guide decisions made by companies, investors, and policymakers. Artificial intelligence is beginning to weaken some of these connections. This is important for Australia’s positioning in an increasingly volatile global economy.

One place where change is particularly visible is the labor market. For decades, skills-oriented technological change dominated advanced economies. New technologies increased the demand for well-educated workers,…